This Tax Reference under Section 133 of the Income Tax Ordinance, 2001 ("Ordinance of 2001") , is to assail order dated 24.04.2017, passed by the Appellate Tribunal Inland Revenue, Lahore ("Appellate T ribunal") .
2. Brief facts of the case are that provisions of Section 153A of the Ordinance of 2001 were inserted through the Finance Act, 2012, effective from 01.07.2012. Under these provisions, the manufacturers were required to withhold tax 0.5% from the distributors, dealers and wholesalers. However , a blanket exemption against these provisions was granted by inserting Clause 80 in Part IV of Second Schedule to the Ordinance of 2001, through S.R.O.No.1487(1)/2012, dated 24.12.2012 ("S.R.O.No.1487") .
3. Notices under Section 161 of the Ordinance of 2001 were issued for the period from 01.07.2012 to 23.12.2012 against the respondent/manufacturer for not withholding the tax under Section 153A of the Ordinance of 2001. The orders under Section 161 of the Ordinance of 2001 were successfully assailed by the respondent/tax-payer before Commissioner Inland Revenue (Appeals) and appeal filed by the Department was dismissed by the Appellate Tribunal through the impugned order .
4. Department' s contention is that the exemption granted vide S.R.O.No.1487, was applicable from 23.12.2013, therefore, the manufacturers were required to withhold tax for the interregnum period, from 01.07.2012 when Section 153A was inserted. Learned coun sel for the applicant/department has reiterated the interpretation through this reference application; contending that the exemption granted vide S.R.O.No.1487 cannot be applied retrospectively .
5. Learned counsel for the respondent has read language of Clause 80 and submits that it was a blanket exemption and operation of the provisions under Section 153A of the Ordinance of 2001 was suspended till 30.06.2013, because the manufactures, being withholding agents, distributors and wholesalers were not prepared to comply with these provisions.
6. Heard. Record perused.
The Clause 80 inserted in Part IV of Second Schedule of the Ordinance, requiring interpretation is reproduced:- "The provisions of section 153A shall not apply to any manufacturer till 30th June, 2013."
7. The language of Clause 80 does support the reasons given by learned counsel for the respondent. There is no starting date and it appears that operation of the provisions was suspended by granting exemption for all the tax- payers till 30.06.2013. In our opinion, language of the Clause 80 is itself showing its retrospectivity for the period from its inception. The interpretation proposed by the applicant/department does not appeal to logic, because its operation for limited interregnum period would not be in consonance with the purpose of the exemption granted by the Clause 80. Basic principle of interpretation is to know the intent of a Legislation. If the intention is reflecting from the language, then the tool of literal interp retation is to be adopted. In our opinion the intent of granting exemption from inception of Section 153A is very clear . Therefore, our answer to the proposition, "whether exemption under the Clause 80 is applicable from 01.07.2012" is in affirmative.
Reference application is decided against the applicant/department.
8. Office shall send a copy of this order under seal of the Court to the Appellate Tribunal Inland Revenue as per Section 133(5) of the Income Tax Ordinance, 2001.